Aurelia Butler

Futures on U.S. five-year notes, which have come to reflect rate hike expectations, showed net shorts of 407,485 contracts based on CFTC data in the week ended Nov. 9.Meanwhile, U.S. 10-year Treasury note futures fell in the latest week. The amount of speculators’ bearish, or short, positions in 10-year Treasury futures exceeded bullish, or long, positions by 267,332 contracts last week. A week earlier, speculators held 268,669 net short positions in 10-year T-note futures, the most since February 2020.Below is a table of the speculative positions in Treasury futures on the Chicago Board of Trade and in Eurodollar futures on the Chicago Mercantile Exchange in the latest week:U.S. 2-year T-notes (Contracts of $200,000) 09 Nov 2021 Prior week week Long 345,187 329,143 Short 361,924 392,251 Net -16,737 -63,108 U.S. 5-year T-notes (Contracts of $100,000) 09 Nov 2021 Prior week week Long 258,018 317,689 Short 665,503 694,042 Net -407,485 -376,353 U.S. 10-year T-notes (Contracts of $100,000) 09 Nov 2021 Prior week week Long 491,821 496,137 Short 759,153 764,806 Net -267,332 -268,669 U.S. T-bonds (Contracts of $100,000) 09 Nov 2021 Prior week week Long 132,694 121,529 Short 160,766 154,076 Net -28,072 -32,547 U.S. Ultra T-bonds (Contracts of $100,000) 09 Nov 2021 Prior week week Long 58,213 47,132 Short 358,995 339,743 Net -300,782 -292,611 Eurodollar (Contracts of $1,000,000) 09 Nov 2021 Prior week week Long 1,581,479 1,561,061 Short 2,553,389 2,554,434 Net -971,910 -993,373 Fed funds (Contracts of $1,000,000) 09 Nov 2021 Prior week week Long 48,886 50,587 Short 116,835 113,055 Net -67,949 -62,468 More

Tunisia last week resumed talks with the International Monetary Fund on a loan package predicated on Tunis imposing painful and unpopular steps aimed at liberalising the economy.International donors have also raised the need for broad support within Tunisia for reforms to help tackle corruption and waste, meaning the government is likely to need the backing of the UGTT, which represents 1 million workers and wields huge political clout, to secure an IMF deal.On Monday, Prime Minister Najla Bouden and the government met with Noureddine Taboubi, the head of the UGTT, and other union officials to discuss the situation.”There is an agreement that the government will implement previous agreements, including on the minimum wage. We will announce the details soon,” Nsibi told a news conference at the governmental palace.Taboubi said that the first meeting with the government was positive and that agreements will be issued later.The government last year approved a plan to raise the wages of about 700,000 employees in the public sector in addition to raising the national minimum wage.The IMF has urged Tunisia to slash subsidies and its bloated public sector wage bill, however, as well as privatise loss-making state-owned enterprises.Adding to the government’s problems, the UGTT last week rejected the idea of cutting subsidies, a stance that will complicate its efforts to reach a deal with the IMF. More

NEW YORK (Reuters) – Surging inflation and expectations of a potentially more hawkish Federal Reserve are accelerating a rally in the U.S. dollar, buoying the currency to a near 16-month high against its peers and putting it on pace for its biggest annual gain in six years. On Monday the U.S. Dollar Currency Index rose 0.3% to 95.437, its highest since July 2020. Graphic: Dollar rebound https://fingfx.thomsonreuters.com/gfx/mkt/jnvwexlwkvw/Pasted%20image%201636749775572.png A number of banks including HSBC, Citi and JPMorgan (NYSE:JPM) have in recent days forecast more gains for the greenback, as Wall Street gauges whether rising inflation will push the Fed to speed up the unwind of its bond-buying program and raise rates more aggressively than expected. Here is a look at some factors driving the dollar’s rally. Graphic: Inflation and real yield advantage https://fingfx.thomsonreuters.com/gfx/mkt/gdpzydkxavw/Pasted%20image%201636727898037.png INFLATION Inflation has run hotter than expected in recent months, bolstering the argument that the Fed will have to act more aggressively to tame rising consumer prices. Higher U.S. rates tend to make some dollar-denominated assets, like Treasuries, more attractive to yield-seeking investors. The U.S. Dollar Currency Index jumped nearly 1% last Wednesday, its largest one-day move in nearly five months, after data showed U.S. consumer prices posted their biggest annual gain in 31 years last month. “The dollar may be in the early stages of an uptrend if higher inflation should prompt the Fed to retire its bond buying program and raise interest rates ahead of current market expectations,” said Joe Manimbo, senior market analyst at Western Union (NYSE:WU) Business Solutions. The U.S. dollar index has appreciated at the start of the last four of the Fed’s hiking cycles, with a mean gain of 3.1% in the first seven months, economists at Citi noted in a recent report. The bank expects the Fed to speed up the unwind of its $120 billion a month bond buying program in January as inflation pressures mount. UBS Global Wealth Management analysts, meanwhile, believe a comparatively more hawkish monetary policy from the Fed could push the euro to $1.10 by the end of 2022, from $1.14 on Monday. Graphic: Bullish on the buck https://fingfx.thomsonreuters.com/gfx/mkt/zdpxonqmkvx/MicrosoftTeams-image%20(15).png BULLISH BETS Net bullish positions on the dollar in futures markets have edged lower in recent weeks, though at $19.51 billion they still remain near recent highs after flipping from bearish in mid-July, according to calculations by Reuters and U.S. Commodity Futures Trading Commission data released on Nov. 5.BofA Global Research’s Bull-Bear Index for exposure and view, which tracks fund managers’ responses on FX surveys, recently stood close to its highest level since December 2016, indicating bullishness on the U.S. currency.The index, which moderated slightly recently, is likely to have readjusted after the latest inflation data, BofA Global Research strategists said in a note last week.”Positioning is not stretched here, but has unwound the 2020 shorts,” the strategists wrote. Graphic: Dollar dominance https://graphics.reuters.com/USA-MARKETS/DOLLAR/byprjkmqzpe/chart.png EMERGING MARKETS A strong dollar can be particularly troublesome for emerging markets, making it more expensive for developing countries to pay down debt denominated in the U.S. currency. The dollar is up 35% against the Turkish lira this year and has gained 5% against the Brazilian real. The MSCI Emerging Market Currency Index is up 0.9%, on pace for its smallest annual gain in three years. On Monday, the lira touched a fresh all-time low against the dollar as concerns of another rate cut from the central bank this week continued to weigh on the currency.”The Fed is starting to tighten monetary policy, worries around China and the pandemic persist, and many emerging markets won’t be able to keep up with the sound growth outlook for developed markets,” Tilmann Kolb, analyst at UBS Global Wealth Management said in a note last week. “We think this means more weakness against the U.S. dollar.” Graphic: Bitcoin boom https://fingfx.thomsonreuters.com/gfx/mkt/znvneklwqpl/Pasted%20image%201636727507803.png BITCOIN BOOM Inflation fears have raised the allure of other assets, including oil, metal and other raw materials. Some analysts believe they have also contributed to the recent rise in bitcoin, which hit a fresh record earlier this month. The world’s largest cryptocurrency by market capitalization is up 120% in 2021. More

The governor of the Bank of England admitted on Monday that the end of the UK’s furlough scheme had generated little additional unemployment so far, suggesting that the main hurdle to seeking an interest rate rise had been cleared.Giving evidence to the House of Commons Treasury committee, Andrew Bailey said that surveys over the past few days had shown “lower [unemployment] than our forecast would imply”.He refused to say whether this was enough evidence for him to vote at the BoE’s December meeting for a rate rise from the current historic low of 0.1 per cent. “I am not saying we’re definitely going to [raise rates] next time,” Bailey said. The statements given by Bailey and three other Monetary Policy Committee members reinforced the view that the BoE has its finger on the trigger for the first interest rate rise since 2018, but that it still prefers to wait for more evidence of sustained inflationary pressure before members make up their minds. Huw Pill, the BoE’s chief economist, said the emerging evidence about the end of the Covid-19 furlough scheme, which paid workers wages while they stayed at home, showed that “the vast majority of people have gone back to work”. Bailey reiterated that developments in the labour market would be the most important factor in his vote. “The labour market looks tight, that’s the big issue at the moment,” he said. He added that he would look at October employment payroll numbers in the Office for National Statistics labour market data due to be published on Tuesday, and at the wider evidence regarding the end of furlough in the December labour market release, due ahead of the next meeting of the MPC. Bailey began his address to MPs by saying: “I am very uneasy about the inflation situation”, adding that “it is not where we wanted to be to have inflation above target”.

The governor did not apologise for leading financial markets to believe there would be a rate rise at the November meeting, saying that he wanted to counter the impression that the central bank would always choose to support economic activity over controlling inflation. “We are in the price stability business,” he added. The two external MPC members giving evidence to the committee had contrasting views of the inflation outlook. Catherine Mann repeatedly made interventions highlighting the risks of economic weakness ahead. She cited a “softness in the potential pricing power of firms”, and said that the withdrawal next year of government support for companies and coronavirus scars lowering prospects for business investment were reasons that inflation might fall away faster than expected. But she added that she believed interest rates would still probably need to rise in coming months if the BoE’s forecast proved accurate. Michael Saunders, who voted for a rate rise at the November meeting, said there was little chance of a wage price spiral at the moment, but a tight labour market, skills shortages and evidence of rising wage growth had persuaded him that the central bank should “start now to withdraw some of the stimulus we put in place in the past year or two”. More

NEW YORK (Reuters) – When Pamela Keniston sits down to do her monthly budget, she has a new element to account for these days.Hint: Short blonde fur, barks fiercely at bunnies and goes by the name of Zuzu.The lovable “supermutt” – a mix of Yorkie, Maltese, Chihuahua and Dachshund – came into Keniston’s life in May 2020, early in the pandemic. But Keniston was not prepared for the cost.From regular grooming, to food, to the spoiled stylings of pajamas and jackets and special collars, the dollars added up quickly. Throw in some medical needs – little Zuzu’s knees needed pricey procedures – and the financial realities of pandemic pets can sometimes take new owners aback.“Having a pet is a big financial commitment,” says Keniston, a digital marketing consultant in Chapin, South Carolina. “All those things really add up.”Indeed, the costs of four-legged companionship are staggering: Since the beginning of the COVID crisis, one in five American households, or 23 million, brought a dog or cat into the house, according to the ASPCA.And a new survey finds they are forking out some $4,500 for yearly care. That is more than pet parents expected in 61% of cases, according to findings from OnePoll, done in partnership with insurer MetLife (NYSE:MET).In fact, two in five respondents said that our furry friends are as expensive, or even more so, than dependents of the human variety. No wonder 60% said they tuck away $200 from every paycheck, specifically for their pet’s necessities.So how can pet parents be smart about their spending without completely draining their financial accounts? Here are four tips.INSURANCEFor some reason the notion of finding insurance stresses pet parents out: 32% find it overwhelming, according to the MetLife survey.But you should definitely look into coverage, because if you do not have it, you could be forced into some very difficult choices (and huge out-of-pocket bills). You will find the best prices when your pet is still young and has not yet encountered any health conditions. Comparison shop just like you would for your own policy, weighing monthly cost against issues like deductibles and the percentage covered after that. In 2020, the average annual premium was $594.15 for dogs, $341.81 for cats.While the upfront costs of insurance are never fun, the return can be well worth it. Little Zuzu’s knee problems – “luxating patellas” to be specific – ended up costing around $3,000 to fix, Keniston says. Thankfully, pet insurance just kicked in – and covered 90% of that bill.PREVENTATIVE CAREIf you are looking to save money, it might be very tempting to put off those annual checkups. But think long term. “Don’t skip annual wellness visits, because this is when your veterinarian can potentially catch problems that can be managed or reversed,” says Kristen Levine, publisher of the Pet Living blog and co-author of the book “Pampered Pets on a Budget”. “This will be less expensive than treating a health condition, possibly a chronic one, that was not prevented earlier.”FOODPet food has definitely gone “premium” in recent years, but that does not mean you have to pay five-star prices. Some ways to save up to 30% on that kibble bill, according to Levine: Buy in bulk, but store in airtight containers to preserve freshness. Comparison shop for best prices at Chewy (NYSE:CHWY).com or Amazon (NASDAQ:AMZN), or warehouse outlets like Costco (NASDAQ:COST) and Sam’s Club.And be sure to maximize the use of promotional savings and coupons. In addition, take advantage of the “subscribe and save” option for regular online purchases.MEDICATIONOne cost you cannot really avoid is medication – either for specific conditions, or for ongoing preventative care such as for fleas or heartworm. But you do you have some flexibility in where you get those medications from, and how much you pay. “There are several websites that offer discounts on over-the-counter and prescription medicines, like Chewy.com and 1800petmeds.com,” says Brandi Hunter Munden, vice president of communications for the American Kennel Club. “There are also companies that have coupons, like GoodRx.”Of course, as any pet parent will tell you, the love and companionship are worth any costs a hundred times over. Just be aware that it will probably set you back more than you expect.“It’s important to have the budget, and the resources, and the bandwidth in your life. And if you do — then you just can’t beat the love of a dog,” Keniston says. More

OTTAWA (Reuters) – The Bank of Canada will not raise its benchmark interest rate until the slack in the country’s economy is absorbed, which has not yet happened but is getting closer, Governor Tiff Macklem said in a newspaper opinion piece on Monday.Macklem also noted that while inflation risks have increased – driven by pandemic-induced demand shifts, supply disruptions and higher energy prices – the central bank continues to view the recent dynamics as transitory.”For the policy interest rate, our forward guidance has been clear that we will not raise interest rates until economic slack is absorbed. We are not there yet, but we are getting closer,” Macklem wrote in an op-ed for the Financial Times newspaper.He added that the central bank’s policy framework – a flexible inflation target focused on the 2% midpoint of a 1-3% control range – means Canadians can be confident that inflation will be kept under control, while supporting a full recovery.”What our resolve does mean is that if we end up being wrong about the persistence of inflationary pressures and how much slack remains in the economy, we will adjust. Our framework enables us to do just that,” Macklem said.The Bank of Canada’s inflation target expires at year-end and work is under way to decide, jointly with the Liberal-led federal government, whether to keep the current framework or try an alternative. The main opposition Conservatives on Sunday called for a swift renewal of the existing target amid escalating inflation.Inflation is soaring as countries around the world rebound from the pandemic, putting pressures on global supply chains. Canada’s inflation rate rose to 4.4% in September and is expected to hit 4.7% in October, with that data due on Wednesday.The Bank of Canada signaled last month that its first rate hike could come as soon as April 2022, though money markets are betting on a hike in March, with a total of five in 2022.The Canadian dollar was trading 0.2% higher at 1.2517 to the greenback, or 79.89 U.S. cents. More

The writer is governor of the Bank of CanadaEven as the global economy recovers, the pandemic continues to challenge people, businesses and governments. For central banks, charting and communicating monetary policy now requires a more delicate balance. In Canada, as in many other countries, we still need substantial monetary stimulus to recover fully, but inflation risks have increased with higher prices for many goods — driven by pandemic-induced demand shifts, supply disruptions and higher energy prices. Despite the unprecedented nature of this crisis, we have remained guided by our framework, which is focused on a nominal inflation anchor. But in carrying out our policies, three lessons have become clear. First, be bold on entry and plan for exit. While it takes courage to embark on exceptional policies, ending them is at least as hard. Faced with a sudden and acute crisis, it is imperative to overwhelm it and underpin confidence.But to do that credibly, we need to have a plan to exit from the emergency response when the time comes. Like many central banks, we rolled out unprecedented liquidity and stimulus programmes at the beginning of the crisis, first to restore market functioning and then to support recovery. From the start, we did our best to define the conditions for our exit despite the enormous uncertainty.For our asset-purchase programmes aimed at restoring market functioning, that definition facilitated a smooth exit once markets normalised. For our quantitative easing purchases, broad exit conditions anchored the gradual tapering that we began in April and completed with the shift to reinvestment in November. For the policy interest rate, our forward guidance has been clear that we will not raise interest rates until economic slack is absorbed. We are not there yet, but we are getting closer. The second lesson we have learnt is that, when faced with a unique crisis, it is better to focus on outcomes than on timelines. When we began QE, we said it would be in place until the recovery was well under way, even if we did not know when that would be. Now that our economy has largely reopened, overall employment is back to pre-crisis levels and growth is forecast to be around 5 per cent in 2021, the recovery is clearly making good progress. Adding further stimulus through QE is no longer needed. As for our forward guidance on the policy interest rate, we were clear from the outset that it was based on an outcome — that slack in the economy would need to be fully absorbed so that the 2 per cent inflation target is sustainably achieved. Our forecasts put that on a timeline, but of course forecasts change with new information. As that new information has come in, we have twice brought forward the likely timing of slack being absorbed, but our forward guidance has not changed. By focusing on outcomes, we have harnessed the power of our policy tools while being clear about the extreme uncertainty that has prevailed through this crisis. That leads to the third lesson: be prepared for the unexpected and be humble. The world has never been through a crisis quite like this. We’ve never shut down the economy and tried to reopen it, multiple times. Our models never contemplated mandatory lockdowns, physical distancing or masks.To manage the uncertainty, we used novel, real-time data sources to supplement traditional economic data. We have been forthright about our projections and the confidence bands around them. Even as the recovery has progressed faster than expected, every stage of the crisis has brought new surprises, reminding us to be humble. This humility is embedded in how we structure and use QE and forward guidance. A focus on outcomes and a reliance on a solid policy framework means that while people can challenge our economic forecasts, they can still have confidence in our resolve to keep inflation under control and to support a full and inclusive recovery. Let me be clear about what that resolve means. It does not mean we have changed our view that recent inflation dynamics are transitory. We continue to believe slack remains in the economy and therefore considerable monetary stimulus is still required. But supply disruptions appear to be lasting longer than we thought, and energy price increases are adding to current inflation rates. While our analysis continues to indicate that these pressures will ease, we have taken them into account for the dynamics of supply and demand. What our resolve does mean is that if we end up being wrong about the persistence of inflationary pressures and how much slack remains in the economy, we will adjust. Our framework enables us to do just that. More